May 2019 CPA Alberta CRA Roundtable, GST Session – Q.8

In finding that input tax credits can generally be claimed by a builder for invoices issued subsequent to the date of self assessment on substantial completion and first occupancy of a multiple unit residential complex (a “MURC”) for work done by suppliers for goods and services sold/installed performed prior to the first tenant move-in, CRA stated:

Under section 133, a supply of property or a service is generally considered to be made at the time that the agreement to provide the property or service is entered into. Therefore, where a builder of a MURC agrees to acquire property or a service for consumption or use in constructing the MURC, the supply of the property or service is generally considered to be made to the builder at the time that the agreement is entered into (that is, the builder is considered to be the recipient of the supply at that time).

The time at which the consideration for a supply of property or a service becomes due under section 152 … does not impact the time at which the supply is considered to be made, nor does that time impact the purpose for which the recipient of the supply acquired the property or service. …

Can input tax credits be claimed by a builder where invoices are issued subsequent to the date of self assessment on substantial completion and first occupancy of a multiple unit residential complex (a “MURC”), e.g., for (i) work done by suppliers for goods and services sold/installed performed prior to the first tenant move-in or (ii) additional construction work required after that time to correct previously-undetected flaws?

In finding that ITCs generally were available for the first, but not the second, type of invoice, CRA stated:

Under section 133, a supply of property or a service is generally considered to be made at the time that the agreement to provide the property or service is entered into. Therefore, where a builder of a MURC agrees to acquire property or a service for consumption or use in constructing the MURC, the supply of the property or service is generally considered to be made to the builder at the time that the agreement is entered into (that is, the builder is considered to be the recipient of the supply at that time). ...

Conversely, where a registrant that is a builder of a MURC has accounted for a self-supply of the MURC under subsection 191(3) and has begun to use the MURC exclusively in making exempt supplies (generally, long-term residential rentals), and the registrant acquires property or a service for consumption or use in repairing the MURC (for example, in correcting flaws or deficiencies in construction) after the time of the self-supply, the registrant is not generally eligible to claim an ITC in respect of the property or service. The eligibility for ITCs in respect of property or services acquired for consumption or use in constructing or repairing a MURC … is not specifically determined based on whether the cost of the property or services is reflected in the FMV of the MURC that is used for a self-supply under subsection 191(3).

Where a builder was invoiced, after the time that it self-assessed for the fair market value of a newly-constructed multiple unit residential complex (at the time of substantial completion and first tenant occupancy) for work done before that time, CRA explained the availability of an input tax credit therefor on the basis that, by virtue of s. 133:

where a builder of a MURC agrees to acquire property or a service for consumption or use in constructing the MURC, the supply of the property or service is generally considered to be made to the builder at the time that the agreement is entered into (that is, the builder is considered to be the recipient of the supply at that time).